Executive Summary CH6
Target marketing includes three activities:
- market Segmentation,
- market Targeting, and
- market Positioning.
Market segments are large, identifiable, distinct groups within a market who share a similar set of needs and wants. The major segmentation variables for consumer markets are geo-graphic, demographic, psychographic, and behavioral, used singly or in combination.
Business marketers use all these variables along with operating variables, purchasing approaches, and situational factors.
To be useful, market segments must be measurable, substantial, accessible, differentiable, and actionable.
We can target markets at four main levels:
- mass,
- multiple segments,
- single (or niche) seg-ment, and
- individuals.
A mass market approach, with full market coverage, is adopted only by the biggest firms. A niche is a more narrowly defined group within a segment. More companies now practice individual and mass customization. In evaluating market segments, the firm must look at two factors: the segment’s overall attractiveness and the company’s objectives and resources. Finally, marketers must choose target markets in a legal and ethical manner.
Five Forces analysis is frequently used to identify an industry’s structure to determine corporate strategy. Porter’s model can be applied to any segment of the economy to understand the level of competition within the industry and enhance a company’s long-term profitability.
The number and power of a company’s competitive rivals, potential new market entrants, suppliers, customers, and substitute products influence a company’s profitability.
Five Forces analysis can be used to guide business strategy to increase competitive advantage.
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